Highlights
- The U.S. is investing billions in domestic rare earth magnet production with new facilities like Vacuumschmelze's $335M South Carolina plant, but political attacks on EVs and wind energy are undermining the demand needed to sustain these factories.
- Anti-clean energy policies could eliminate tens of thousands of tonnes of magnet demand by 2030—equivalent to 10× the output of new plants—while defense applications alone cannot fill the gap, accounting for only a small fraction of commercial needs.
- Without policy coherence that supports both supply-side investments and demand-side growth across EVs, wind, robotics, and other sectors, the U.S. risks building idle factories with no customers—repeating past industrial failures.
After decades of offshoring, the United States is finally investing in a domestic rare earth magnet supply chain. New plants like Vacuumschmelze’s $335 million facility in South Carolina – the first U.S. magnet factory in 25 years – promise to “end China’s chokehold” on magnet production. Backed by government and industry (e.g. a ten-year offtake from GM), these projects aim to secure critical NdFeB magnets for electric vehicle motors, wind turbines, and defense systems.
Yet a glaring contradiction threatens this revival: political attacks on clean energy and EVs are undermining the very demand that justifies these factories. President Trump’s recent policies – rolling back fuel economy standards, phasing out EV tax credits, and even halting offshore wind projects – have “dampened projected [EV] demand” in the U.S. cites Henry Sanderson at the Substack Volt Rush (opens in a new tab).
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In August 2025, Trump’s administration withdrew $679 million from a dozen offshore wind projects as “wasteful…fantasy wind projects,” explicitly prioritizing fossil-fuel infrastructure instead. This policy whiplash means America may rebuild rare earth supply… only to find a demand shortfall.
EVs and Wind: Key Drivers at Risk
Sanderson notes its’ difficult to overstate how crucial electric vehicles (EVs) and wind turbines are for rare earth magnet demand. The U.S. Department of Energy projected that over half of U.S. magnet demand by 2030 would come from EV traction motors and offshore wind generators. In a high-growth scenario, U.S. magnet needs would reach 37,000 tonnes by 2030 – with EVs and wind accounting for the bulk. Now those assumptions are shakier. BloombergNEF has slashed U.S. EV adoption forecasts, citing policy reversals. Cumulative EV sales through 2030 are expected to be 14 million units lower than last year’s forecast (opens in a new tab).
That equates to tens of thousands of tonnes of NdFeB magnets worth of lost demand – easily 10× the annual output of the new Sumter magnet plant. Likewise, Trump’s hostility to renewables has stalled wind farm investments. The result: a potential magnet glut. If U.S. magnet factories (including new plants in allied countries like Korea and Vietnam) ramp up as planned, they could overshoot domestic needs absent the growth of EV and wind markets.
Defense applications alone won’t fill the gap. Even though NdFeB magnets are essential for national security (in everything from F-35 jet actuators to precision-guided munitions), defense orders are relatively small—see the Federal Register (opens in a new tab).
A 2021 U.S. Department of Commerce study found that defense demand is only a small portion of overall magnet demand – insufficient to sustain a viable industry (opens in a new tab). In fact, the Pentagon projects needing at most 10,000 tons of magnets by 2030 according to one account (opens in a new tab) via Vulcan Elements, a fraction of commercial needs. In short, without robust civilian demand, the economics of a domestic rare earth supply chain falter. As the Commerce report bluntly noted (opens in a new tab), commercial scale is needed for sustainability.
Beyond EVs: Can Other Segments Pick Up Slack?
If U.S. policy continues to suppress EV and wind growth, alternative sectors could help—but only partially. Hybrid and plug-in vehicles remain an immediate cushion, with sales of range-extended EVs already up 83% in 2024. Each unit still relies on NdFeB magnets for traction motors, though in smaller amounts than full EVs.
Beyond transport, magnet-intensive demand is emerging from drones, eVTOL aircraft, and the fast-rising robotics sector. Industrial and humanoid robots—now expanding at double-digit rates—require multiple high-strength motors per unit, and China has already identified them as a “core new engine” of magnet demand. Together, these sectors could stabilize consumption, but they cannot yet replace the vast tonnage once expected from vehicle electrification and offshore wind.
The deeper problem lies in policy incoherence. Washington is pouring billions into mines, separation plants, and magnet factories while political attacks on EVs and renewables throttle demand growth, a mounting contradictory position that could lead to an economic bloodbath in the years to come.
China’s Made in China 2025 strategy, by contrast, synchronizes supply with demand through coordinated targets for EVs, wind, and robotics. If America rebuilds its supply chain but lets customers vanish, it risks a familiar outcome—industrial overcapacity without market pull. To avoid subsidizing idle plants, the U.S. must pair its supply-side resurgence with deliberate demand-side strategy, ensuring that magnets made in South Carolina and Texas actually have machines—and industries—to power.
Charting a Balanced Path Forward
A strategic course correction is essential for the U.S. to realize its rare earth ambitions—supply and demand must grow in tandem. Policymakers should stop undermining electric vehicles and wind energy, the largest magnet-consuming sectors, and instead renew support through incentives, infrastructure, and consistent regulation. Diversifying magnet demand across sectors like defense, aerospace, robotics, consumer electronics, and medical devices can buffer volatility. Embracing hybrids as a transition and investing in advanced magnet technologies, recycling, and heavy rare earth capacity will improve resilience. Finally, integrating U.S. production into global markets—through exports, partnerships, and coordinated demand-side policy—will be key to ensuring sustainable growth and industrial viability.
Conclusion
The U.S. rare earth magnet sector stands at a delicate inflection point. For the first time in a generation, supply-side momentum is real – mines, separation facilities, and magnet plants are being built on American soil. This addresses a critical strategic vulnerability by reducing reliance on Chinese imports.
However, the demand side is lagging dangerously, threatened by policy inconsistency and short-term politics. As Henry Sanderson observes, the U.S. risks “creating capacity without customers”, repeating a pattern of past industrial missteps.
The solution is not to abandon the nascent magnet industry, but to ensure it has a thriving domestic market to serve. In the near term, that means reconciling the contradiction in U.S. strategy: you cannot champion supply chain security while simultaneously sabotaging the clean-tech industries that make that supply chain economically viable.
Other sectors – drones, robotics, hybrids, defense
Will contribute to magnet demand growth, but they are complements, not substitutes, for a healthy EV and wind sector in this decade. America’s competitors understand this linkage: China’s rare earth dominance was built by fostering end-use demand (from EVs to high-speed rail to automation) in parallel with supply. To truly secure rare earth independence, the U.S. must do the same. By embracing a holistic approach that pairs supply investments with demand stimulation across emerging industries, America can ensure its rare earth supply chain renaissance does not falter.
Otherwise, we may find that we’ve solved the materials part of the equation, only to discover a lack of buyers—an ironic and costly outcome for an initiative born of the desire for resilience. In short, build it and they will come only works if we don’t scare off the “they.” It’s time to align our industrial policies so that Made in USA magnets have strong domestic markets, from electric cars to robots, ready to use them. Without that, we risk having factories and mines…with no one to buy their output.
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The slow death for the large majority of US/ROW RE potential miners. We have long lamented all the theoretical projections for future needed RE supply made this decade.
As we have said ‘to those who have will be given’ in the RE sector (and even a few of those will likely implode as they emerge). That includes strategic and major private funding, with documented processing offtakes to magnet and endline users.
Look at ASM with its metals making for S. Korean magnet makers/OEMs. Then, Arafura with signed off-takes to Hyundai, Kia and Semens Gamsa and with over a billion from at least 4 nations.
In Europe we have NEO with feedstock supply, processing and new magnets to European manufacturers.
In the US we have MPs’ mine to magnets for GM (and US military?).
Now we have AREC with supply to Vulcan magnets. Both chains with massive strategic funding. It’s all about tying in such chains to mid and end line supply as it exists presently and projections for this decade. Beyond?
Then, will a Dem’ presidency in 2028, should it occur, become the savior for US EV and turbine development? Will the robotics and drones cited be a lifeline for further RE supply and therefore sector development? Who knows, but no doubt the prime movers now arriving will be expanding their operations to gobble up much of any future needs based on being able to provide specific and consistent supply; again, more nails in the future of other RE wannabee hopefuls.
RE retail investors today, IOHO, should be looking for the ‘concrete’ RE wannabee moves that are occurring now. Moves that will take care of much of the available offtake needs this decade, as well as probably most of the strategic and private money that will fuel the major portion of the 2020s US/ROW RE sector buildout.
As with most new sector moves it seems the tendency is for many wannabees to arrive only to quickly see prime movers come to the forefront to dominate, leaving a trail of early hopefuls in their wake, e.g., trains, autos, fracking, etc. GLTA Rare Earths Investor (REI)